CKE Restaurants swings to profit in 1Q

Menu price increases over the past year and lower food and packaging costs helped profits swing positive for CKE Restaurants Inc., the parent to the Carl’s Jr. and Hardee’s chains, during the first quarter, the company said Wednesday.

For the first quarter ended May 21, net income was $9.5 million, compared with a loss of $2.6 million in the year-earlier quarter, CKE Restaurants reported. Revenues increased 3 percent to $412 million, compared with $400.6 million the prior year.

This period was also the seventh consecutive quarter of blended same-store sales increases for company-operated restaurants: they increased 2.6 percent, reflecting an increase of 2.6 percent for both Carl’s Jr. and Hardee’s.

Puzder credited same-store sales increases to the promotion of the Southwest Patty Melt limited-time offer at both Carl’s Jr. and Hardee’s. The campaign included a commercial featuring swimsuit model Kate Upton — the latest in CKE’s tradition of featuring sexy ads to capture the attention of young, hungry men.

The Southwest Patty Melt, however, is now out of locations that have moved on to the latest promotion of a Grilled Cheese Bacon Burger. On July 4, guests who dress as Spider-Man — without a mask, per company request — will get a free Grilled Cheese Bacon Burger at either Carl’s Jr. or Hardee’s. The promotion is tied to the summer movie featuring the super hero, which opens July 3.

The company also said that while it saw lower commodity costs for produce, pork and dairy, those savings were partially offset by higher costs for beef.

Puzder said franchisees opened 33 new locations during the quarter, including 13 in the U.S. and 30 internationally. About 14 percent of CKE’s restaurants are in other countries, and that number is growing, Puzder said. The company recently signed a franchise agreement to open 100 locations in Brazil, for example.

CKE in May registered for a $100 million initial public offering of stock to pay down debt and for other purposes. The company is owned by Columbia Lake Acquisition Holdings Inc., an affiliate of private-equity firm Apollo Management, which acquired CKE for about $1 billion, including debt, in 2010. Prior to that deal, CKE had been a public company for 29 years.

At the end of the first quarter, Carpinteria, Calif.-based CKE Restaurants Inc. operated or franchised 3,263 restaurants worldwide, including 1,322 Carl’s Jr. and 1,932 Hardee’s locations.

Contact Lisa Jennings at [email protected].
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